Summary: Explanations by the Raimondo administration about the Governor’s proposed surcharge on health insurance premiums appear to be misleading. The truth about the new tax expose four major concerns about how it is NOT comparable to the would-be federal exchange tax.

FOR IMMEDIATE RELEASE

March 17, 2015

Truth about the proposed HealthSource RI Tax

Is Not Commensurate in Scope to Federal Exchange Tax:
Tax Base, Tax Levy, Tax Certainty, and Next Steps are Considerably Different

Providence, RI — Explanations by the Raimondo administration about the Governor’s proposed surcharge on health insurance premiums appear to be misleading. Designed to raise money to partially fund continued state operation of the controversial HealthSource RI exchange, the tax is being positioned by administration officials as comparable to the fees that would be charged if the exchange were to be returned to the federal government.

However, as broached in a recent post in The Ocean State Current, there are a number of major differences between the federal tax and Governor Raimondo’s proposed tax:

First, who gets taxed? Under a federally run exchange, only those who purchase a policy through the exchange, or who purchase an identical policy outside of the exchange, would be taxed. But, as the Center has been projecting for years, because of Rhode Island’s small size and low enrollment numbers, not enough revenue can be raised without charging exorbitant per policy fees.

Under Raimondo’s plan to pay for HealthSource RI’s high projected costs, there would be an assessment on ALL individual and small business policies in the state, whether purchased inside or outside of the exchange.

Also of note, vocal special interest groups, such large corporations and union shops, would appear to be exempt from the tax; yet another special interest handout?

Second, how much tax? Under the federal plan, it was estimated that the 3.5% federal rate assessment based on the 30,000 or so who are currently purchasing insurance through the exchange, would result in about $5-6 million in fees. The Governor’s tax is projected to raise an ‘initial’ $6.2 million in half a year, or about $12 million in annual revenues, making it at least twice as expensive for Ocean State policyholders as the federal option.

Additionally, the proposed 3.8% and 1% tax on individuals and small employers, respectively, is significantly higher than similar 1.35% and 2.5%-3% taxes in Connecticut and Massachusetts, which can afford the lower rates, as they can be spread across a significantly higher number of policy holders.

Third, a fixed tax rate? Use of the term ‘initial premium assessment’ indicates a potential slippery slope. In fact, if HealthSource RI’s expenses rise, or when federal funds disappear, the health and human services secretary is empowered to raise rates for this tax in future years, while the federal plan is statutorily fixed.

Fourth, a stepping stone to state control? Maintaining the exchange under state operation also maintains the threat of further state control over Rhode Island’s healthcare industry, with separate legislation in 2014 (H7819) and 2015 (H5387) already seeking to give government unprecedented new powers. A single-payer system, such as that advocated for by the new HealthSource RI Director, has long been a goal of progressive lawmakers. Under a federal exchange, this threat is virtually eliminated

Providence, RI — The Rhode Island Center for Freedom and Prosperity will participate in the legislative press conference announced earlier today by the RI House of Representatives minority office regarding the Bright Today educational choice scholarship legislation that will be introduced this Wednesday in both the House and Senate.

Joining the bi-partisan legislative sponsors who will speak at the statehouse event, the Center’s CEO, Mike Stenhouse, will distribute and review an Executive Summary of the Policy Brief that describes the goals, features, statewide fiscal projections, and history of this bold legislation.

If enacted, the legislation would become the most innovative and universal school choice program in the entire nation, according to the Friedman Foundation for Educational Choice, which is partnering with local organizations in advancing the scholarship program.

Also expected to attend are members of the growing BrightToday.org coalition, including Gertrude Jones, former President of the Providence School Board, who is also scheduled to provide remarks.

State House to be Illuminated in Yellow
Center to Man Exhibit Table and Release New Report

Providence, RI — Rhode Island Families for School Choice, a member of the recently launched “Bright Today Educational Choice” coalition, will host its annual Legislative Reception at the statehouse tomorrow afternoon, featuring a rally-speech to attendees by the nationally renowned “school choice rabbi,” Rabbi A. D. Motzen from Cincinnati, as well as musical performances by area private school students.The event, which is part of the celebration of National School Choice Week, expects over 300 people to attend and will conclude with the state house being illuminated in yellow light, the signature color of the celebration. Also participating will be a representative from theFriedman Foundation for Educational Choice, and multiple private school groups.Legislators and the pubic are encouraged to attend to learn more about how expanded educational options can empower parents to be able to choose the best educational path for their children. The coalition expects to announce bi-partisan sponsored legislation in the coming weeks.

The nonpartisan RI Center for Freedom & Prosperity will man an exhibit table at the event, with “Myths vs Reality” of school choice handouts available. The Center will also publish a new report Thursday morning that documents how Rhode Island families, at nationally leading rates, are already sacrificing income so that their children can escape sub-standard government-run schools and, instead, choose alternative private educational paths … and that such demand exceeds supply.

All participants will be available for media interviews at the event, or can be scheduled by contacting the Center.

National School Choice Week (January 25 – 31, 2015) will be America’s largest-ever celebration of opportunity in education. Featuring more than 11,000 independently-organized events across all 50 states, the Week shines a positive spotlight on effective education options for children. National School Choice Week is independent, nonpolitical, and nonpartisan, and embraces all types of educational choice – from traditional public schools to public charter schools, magnet schools, online learning, private schools, and homeschooling.

About the Center

The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise think tank. The mission of the 501c3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms.

http://rifreedom.org/wp-content/uploads/logo_sail_300x100.png00RI Center for Freedomhttp://rifreedom.org/wp-content/uploads/logo_sail_300x100.pngRI Center for Freedom2015-01-28 10:09:202015-01-28 13:09:14"School Choice Rabbi" to Speak at State House Event

New Interactive Tool Compares RI to Other States on National Test Scores

Allows comparison of student performance among various demographic groups!
Center also publishes key findings analysis using the tool

Providence, RI — As part of the recently launched “Bright Today Educational Choice” campaign, the nonpartisan RI Center for Freedom & Prosperity announced today that it has published a new, online tool that allows parents and educators to self-analyze the performance of Ocean State students as compared with other states.The interactive tool aggregates scores from 2000 to 2013 from the National Assessment of Educational Progress (NAEP) tests, often referred to as the ‘nation’s report card’, which compiles student performance data for math and reading in all states. Various demographic student groups such as 4th/8th grade, reading/math, male/female, black/hispanic/white, low-income, and disabled can be filtered and compared to similar groups in other states

Using the tool, the Center also published a brief analysis with multiple comparisons that further demonstrate the need for families to have more choices when it comes to educating their children. Key findings show that for Rhode Island students:

Previous performance improvements have flat-lined in recent years

Overall performance is worst among all New England states

Hispanic performance is last among New England states

Low income student performance is also last in this region

As compared with five states that have been among the most pro-active when it comes to educational reform, RI students either lost ground or didn’t gain ground in EVERY demographic group

The main tenets of the “Bright Today Educational Choice” campaign, are that no child should be condemned to attend a failing school; that every family should feel confident that their children can dream of a bright future; that no child should have to wait for tomorrow’s reform promises; and that every child deserves an education of their family’s choice – today. A dedicated campaign website can be viewed at www.BrightToday.org.

The Center is part of a growing coalition, currently comprised of the nationally renowned Friedman Foundation for Educational Choice, as well as number of in-state advocacy groups.

The Bright Today coalition will announce specific policy solutions in the coming weeks and expects to have bi-partisan legislative support in the Rhode Island General Assembly for a package of related bills. Further, one coalition member, RI Families for School Choice, will host its annual school choice Legislative Reception at the Statehouse on the afternoon of January 29, as part of the National School Choice Week celebration.

The Center expects to release a number of education studies in the coming months, including a study on Rhode Islanders’ already high propensity to choose private schools; a demographic study on long-term spending pressures; and a financial modeling tool that will estimate the revenue effect of specific school choice policies.

Parents or individuals wishing to stay informed about or become involved with the campaign, should register at the RI Families or School Choice website, EdChoiceRI.org. The Center has also set up an educational choice home page on its website that can be viewed at RIFreedom.org/EdChoiceRI.

http://rifreedom.org/wp-content/uploads/logo_sail_300x100.png00RI Center for Freedomhttp://rifreedom.org/wp-content/uploads/logo_sail_300x100.pngRI Center for Freedom2015-01-21 07:20:432015-01-21 07:31:11Center Launches New Interactive Tool to Compare RI to Other States on National Test Scores

“I have seen first-hand the impact that HUD and state affordable housing mandates have had on creating an imbalance in Woonsocket’s tax base by adding an extra real estate tax burden on non-subsidized commercial and residential property owners in our community,” said Senator Mark Cote, Democrat state Senator, D-24.

“The state mandate to establish a preferential property tax cap on subsidized properties in Woonsocket caused a revenue shortfall. The Woonsocket legislative delegation submitted a bill in 2013 to the General Assembly seeking relief from this mandate, but supporters of the affordable housing/sustainable development movement successfully lobbied to have the bill vetoed by Governor Chafee,” Cote went on to say.

“The prospect of a state run Urban Redevelopment Authority, granted new powers, as envisioned in the RhodeMap RI draft plan is also concerning, in that it could give expanded government control over individual property owner rights.”

“As recommended in the bi-partisan letter I co-signed with concerned members of the House and Senate to the Division of Planning in November, the RhodeMap RI process must be indefinitely postponed. More public scrutiny, comment and potential revisions are required,” the Senator concluded.

Warren Last, East Greenwich First

In 2013-14 Freedom Index Rankings

Based on the Freedom Index scores of the General Assembly delegations from each of the 39 cities and towns in Rhode Island, Representatives and Senators from the town of Warren, as a group, scored the lowest; indicating that this group voted on legislation that most infringed the individual, economic, or educational freedoms of Rhode Islanders. Conversely, and despite scoring a negative number itself, the delegation from East Greenwich ranked at the top of the list, meaning votes from its legislators least infringed on our freedoms.

http://rifreedom.org/wp-content/uploads/logo_sail_300x100.png00RI Center for Freedomhttp://rifreedom.org/wp-content/uploads/logo_sail_300x100.pngRI Center for Freedom2014-10-20 08:04:202014-10-20 08:05:08Delegation from Warren Ranks Last in Freedom Index

https://rifreedom.org/wp-content/uploads/big-questions.jpg168300RI Center for Freedomhttp://rifreedom.org/wp-content/uploads/logo_sail_300x100.pngRI Center for Freedom2014-07-28 07:25:502014-11-10 09:09:29Six BIG Questions No One is Asking in the 2014 Campaign

https://rifreedom.org/wp-content/uploads/StateOfState-Sten.jpg84150RI Center for Freedomhttp://rifreedom.org/wp-content/uploads/logo_sail_300x100.pngRI Center for Freedom2014-06-30 08:29:472014-11-10 09:09:58State of the State

The budget unveiled in the Rhode Island House Finance Committee, last week, showed a $13.3 million decrease in state spending, compared with the governor’s proposed budget. Approximately $3.1 million of the reductions overlap with the Spotlight on $pending report that the RI Center for Freedom & Prosperity released in March, after a review of the governor’s proposal.

Another $52.9 million in Spotlight on $pending suggestions were in the budget, but were either not counted as a line item or amounted to transfers to federal funds.

“The legislature clearly has different priorities than the Center, but the fact that some of our suggestions found their way into the budget shows how important it is to have alternative voices,” says Justin Katz, who is the research director for the free-market think tank and a coauthor of the Spotlight on $pending report. At a State House press conference promoting Spotlight on $pending on April 2, Katz had told reporters that the Center hoped legislators would look to their analysis for ideas no matter what fiscal goals they were trying to reach.

Specific areas of agreement between the Center and the House were as follows (note that reductions are from the governor’s proposal, not from current spending):

A $1 million reduction in local funding for the State Council on the Arts.

Over $323,973 in savings by not adding new employees to a consolidated Diversity, Equity and Opportunity office.

Ending $159,585 in Public Utilities Commission personnel previously funded by the federal American Recovery and Reinvestment Act (ARRA), rather than absorbing them into state spending.

Saving $145,303 by running a new certificate of good conduct program for parolees with existing personnel.

A $100,000 reduction in payroll within the governor’s office.

Not adding a $75,000 per year Creative and Cultural Economy Coordinator to the state’s payroll.

The House also agreed with the $50 million in savings the Center recommended by not expanding the historic tax credit program as the governor wanted. However, neither the governor nor the House included those costs or savings anywhere in the budget.

Another area of partial overlap came with the Unified Health Infrastructure Program (UHIP), which will make it easier to enroll people in multiple government programs when they apply for any one of them. The Center expects this program, operated using the state’s health benefits exchange (HealthSource RI), to amplify the cost of social service programs and called for it to be ended. Instead, the House budget managed to transfer $2.9 million in near-term spending on the project from general revenue to federal sources.

“It’s going to take more feedback from Rhode Islanders to change way the state government operates,” says Katz, who would prefer the savings to be used to reduce the state sales tax rate to 3%, creating over 13,000 private-sector jobs. “Still, counting the tax credits and UHIP, the House budget includes 25% of the savings that we identified in Spotlight on $pending.”

The Spotlight on $pending report was produced in cooperation with the Taxpayers Protection Alliance and coauthored by Drew Johnson and Justin Katz.

Stay Connected

Enter your e-mail address in the form below to receive periodic updates about important issues impacting our state or to update your existing profile with us. Check out the new categories/issues you can sign up for.